Except for the fact that Mortal Kombat is one of the most well-known franchises in the world. If they can make Capcom vs SNK, Marvel vs Capcom, Mortal Kombat vs DC, Tekken vs Street Fighter, Tatsunoko vs Capcom and X-Men vs Street Fighter, I'm pretty sure they could do MK vs Street Fighter.

Though fighters as a whole are a niche genre, MK is in an even smaller niche compared to Tekken and Street Fighter. Hell, even compared to Virtua Fighter, Soul Calibur, and Tatsunoko they're small. The 90s are gone.